The trade body for life settlement funds labelled ‘toxic’ by the FSA has warned that moves to ban the products would damage other asset classes in the UK and beyond.
The European Life Settlement Association (Elsa) issued a strongly worded statement objecting to the FSA’s ‘misuse’ of language when describing Traded Life Policy Investments (TPLI).
‘A ban of marketing TLPIs to retail investors would, if adopted, have negative consequences beyond retail investors and perhaps in other markets within the United Kingdom and beyond,’ said Anna Bailey, Elsa chair.
She urged the regulator to engage with the industry and review its decision to ban TPLIs to UK retail clients and requested the FSA extend the deadline for the consultation.
‘We recommended that the FSA take a thorough approach to understanding TLPIs and proposing appropriate protections for retail investors,’ Bailey said.
'Elsa's major concern is that the FSA had not sufficiently consulted with industry participants before announcing an unprecedented warning. Elsa objects to the FSA's misuse of the word of 'toxic' to describe an asset class that provides tremendous benefits to consumers and is an attractive and sound asset for many investors worldwide.'
At the end of last year, the FSA likening the so-called death bonds to ‘Ponzi’ schemes and said they were ‘toxic’ products that should not be sold in the UK retail market.
Fund management firm EEA was forced to suspend in its life settlement’s fund in December 2011 due to a high level of redemptions requests following the FSA statement.
Last month the firm demanded more clarity from the regulator, .